We've read a few hedge fund investor letters in our time, and we'd like to think that we have a feel for the tone and meter of how hedge fund managers convey their innate undeniable brilliance despite what the performance of their actual fund might indicate.
Up, down, or sideways, the true legends of the game always keep it 100 when it comes to their confidence in themselves. Investors need to know that those losses are fixable because this master of the universe has this situation on lock. It's almost a comfort to read that these guys are still able to put an ego flourish on a letter admitting to objectively shameful performance.
But today we read something that turned our world upside down.
We knew that things have not been going well for David Einhorn over at Greenlight Capital for a while now, and we had more than an inkling that it was taking a toll on the man as well, but after reading the Greenlight Q2 letter to investors, we simply want to find David Einhorn and hold him in our arms. Just hold him tight and tenderly whisper "This too shall pass..."
We had another difficult quarter and lost an additional (5.4)%,1 bringing the Greenlight Capital funds’ (the “Partnerships”) year-to-date loss to (18.3)%. During the quarter, the S&P 500 index returned 3.4%, bringing its year-to-date return to 2.6%.
Over the past three years, our results have been far worse than we could have imagined, and it’s been a bull market to boot. Yes, we have made some obvious mistakes – the worst of which was not assessing that SunEdison was a fraud in 2015 – but there have been others.
This. Is. Harrowing.
We've never seen a hedge fund manager this despondent. And we write about Ackman all the fucking time.
Oh, and if you're wondering if Einhorn addressed his divorce, umm, we're pretty sure he did!
Some have looked for reasons other than isolated mistakes. Theories include getting older, changing lifestyles, and an unwillingness to adapt to new market environments. We have been accused of being stubborn, but one person’s stubbornness is another person’s discipline. We will continue to be disciplined. Although it might be nice to have something to blame for the poor results, the truth is that we have been making every effort and leading with our best thinking.
Being down more than 18% on the year is bad. It's real bad, but should it snuff out the light in David Einhorn's soul? No. The Mets should do that [poor guy can't catch a break].
We want to be careful and not share too much of the letter, less because of propriety and more because we don't think you'll ever smile again if you read the whole thing, but this felt like something you should read before going to light a candle for what's left of David Einhorn's fragile psyche...
Right now the market is telling us we are wrong, wrong, wrong about nearly everything. And yet, looking forward from today we think this portfolio makes a lot of sense.
Even Ackman never admitted to feeling this low.